Sandy Springs leaders’ fears that an incorrect Atlanta sales tax is added to some local purchases recently came true at a Starbucks coffee shop and the online bookseller Bas Bleu.
In recent months, both businesses applied the city of Atlanta’s 8 percent sales tax to local purchases, rather than the 7 percent tax charged in Sandy Springs. Besides overcharging customers, that could mean the local share of the revenue is going to the wrong city, though it’s hard to tell.
“Right now, it’s not transparent or clear to me how the system works,” said Sandy Springs City Councilmember Gabriel Sterling, who said he noticed the incorrect sales tax on his receipt from the Starbucks at 6001 Peachtree-Dunwoody Road in Sandy Springs. “The [state] Department of Revenue may have all this figured out, may be doing it right … I just don’t know.”
Starbucks acknowledged and fixed its incorrect tax in response to Reporter Newspapers questions. Bas Bleu did not respond to questions sent via its website.
Sandy Springs’ concerns date back to the city’s 2005 incorporation in ZIP codes that once were just called “Atlanta” or by other city names. While they often carry a city name, ZIP codes are simply mail delivery route areas created by the U.S. Postal Service for its planning convenience. They rarely match actual city borders, and Sandy Springs has several that overlap Atlanta and other cities.
Sandy Springs officials fear confusion about which city a business is in — especially when businesses use software that automatically calculates sales tax rates based on ZIP codes, rather than a city map.
Early on, Sterling said, his city had problems with license plate fees and property tax bills. “That got fixed, but it took two years,” he said.
Sandy Springs officials recently have voiced renewed concerns because both the Fulton County and Atlanta sales taxes will increase in April — to 7.75 and 8.9 percent, respectively — to pay for voter-approved programs of local transportation and transit projects.
The sales tax question has remained more of a fear supported by anecdotes rather than audits. After a recent City Council discussion about the issue, Sandy Springs officials were unable to provide an example of a business calculating the wrong sales tax. The Department of Revenue has a system to check tax collections against city-provided business registration lists, a spokesperson previously said.
But now there are at least two solid examples to investigate. The Starbucks on Peachtree-Dunwoody near Hammond Drive, about 2.5 miles outside the Atlanta border, was charging the 8 percent tax, Reporter Newspapers confirmed with a receipt for a coffee purchase there. The shop’s address on the receipt lists its city as “Atlanta.”
Sterling said he notified staff members at the Starbucks, which opened last summer, about the incorrect tax. “They said, ‘It’s the software we got,’” he recalled.
“You were correct. There was a miscalculation,” Starbucks corporate spokesperson Reggie Borges said on Feb. 1.
Starbucks fixed its system on Jan. 31 to charge the correct tax, Borges said. But he could not immediately explain what the problem was, including whether it was Starbucks’ own system or a third-party software issue, though he said he will look into it.
Meanwhile, Borges said, customers overcharged the 8 percent tax at the Sandy Springs store can contact the state for a tax refund, or bring their receipt to the store for compensation–“likely a cup of brewed coffee.”
Nancy Lesser, a resident of Spalding Hills Drive in the Sandy Springs panhandle, said she’s noticed the Atlanta tax rate applied to her purchases on Bas Bleu, an online bookseller.
“I’ve placed at least two orders with 8 percent sales tax and sent them a question both times asking them to correct it,” Lesser said in an email. “I have never gotten a response.”
A Bas Bleu order set up by Reporter Newspapers to Lesser’s address—which is about 7 miles outside Atlanta — confirmed the calculation of what the website calls “8.00% sales tax for Georgia zip [sic].”
According to its website, Bas Bleu started in Atlanta in 1994 and, according to state records, is still registered in that city.
The Department of Revenue did not respond to questions about how the Starbucks slipped through the system and where exactly revenues are going. Sterling said the city has never gotten good explanations about the process, either, so “I don’t fully know, trust [or] understand that [proper revenue distribution] is happening.”
“Nobody’s being evil,” Sterling said, but state officials have never explained how the revenue goes from “Step A to Step F.”